1. Field of the Invention
This invention generally relates to the field of management analytics. More particularly, the present invention relates to predicting vintage behavior.
2. Description of Background Information
Businesses have available a wealth of customer account management tools. These tools can suggest the products that a customer is likely to buy, the most valued customers, whether customers will pay their bills on time, whether a customer may have fraudulent intent, or the best time of day for a telemarketer to solicit. These tools manage information at the account level.
Very few tools exist to assist in the management of groups of consumers. Management, however, may need to know how demographic segments of its consumer base will likely evolve over time in terms of their revenue generation, maintenance expense, and credit losses. Today, few businesses know how their own policy decisions, competitive environment, and economic environment impact these aspects of their customer segments.
In certain direct business models, tests may be designed to measure such effects, but many businesses do not have this capability. In the absence of such knowledge, businesses cannot properly target-market to specific customer demographics; balance their products and customer segments for maximum profit and risk management; or hedge their business risks through capital reserves of financial instruments.
Unsatisfactory attempts have been made to perform cash flow and risk management analysis. Banks, for example, have studied the natural maturation of all customers in the average (referred to as “Vintage Analysis” in consumer banking). Banks, however, have not calibrated the behavior of specific vintages to the average or analyzed external effects on consumer behavior. Accordingly, banks, like many businesses, are in need of a tool that may project the impact of policy decisions, competitive environment, and economic environment on their customer segments.